All who listen to this masterful and lucid polemic for a free market economy will never question Milton Friedman's Nobel Prize in economics. Friedman and his wife Rose team to write a most convincing and readable guide that illustrates the crucial link between Adam Smith's capitalism and the free society.All who listen to this masterful and lucid polemic for a free market economy will never question Milton Friedman's Nobel Prize in economics. Friedman and his wife Rose team to write a most convincing and readable guide that illustrates the crucial link between Adam Smith's capitalism and the free society.Read Less
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Milton Friedman, through his 1980 PBS TV series and subsequent book entitled Free to Choose, did much to make free market ideology attractive to many Americans. The TV series remains available online and on DVD, and the book remains in print. Friedman was a Nobel laureate for his economic work, but not for his free market ideology. I can?t judge the work on which the award was based, but I can judge his presentation of free market ideology. It is ideological propaganda, intellectually shoddy and logically flawed.
For simplicity I will deal only with the book, and for the most part only with its brief ?Introduction.? As with most such books, the introductory materials establish the basic assumptions that control the book. Friedman takes 1776 as his baseline, with the publication of Adam Smith?s The Wealth of Nations and our Declaration of Independence as the two sets of ideas that made possible the story of the economic and political ?miracle? that is the United States. Throughout the book he refers back frequently to Adam Smith, but having quoted the Declaration through the equality of men and the definition of our unalienable rights, Friedman forgets the Declaration. He forgets, too, that its next phrase insisted that ?to secure these rights, governments are instituted among men.?
Friedman, in other words, rejects the proposition that the role of government is to secure our rights and assumes that economic freedom?the ?free market??can and should suffice to shape and manage national life. The fundamental problem with the arguments throughout the book is that a free market is as easy to find as a unicorn. It has not and does not and cannot actually exist. Friedman?s free market ideology assumes a condition in which all individuals are equal, in which no significant differentials exist between the powers of individuals, and in which no institutions exist other than the government. It is a world without corporations, without banks, without special interest groups, without organizations that privilege some economic players over others.
The second problem is that Friedman?s conception is not about an economic system but about social organization. He imagines what Michael Sandel would call a ?market society,? a society organized by price alone. For Friedman life is economics; he does not conceive of a social order with non-monetary values, a social order using market mechanisms to serve those non-monetary values. Drawing on Adam Smith?s ?invisible hand? he conceives of a social order organized completely on the basis of economic relations. Economic freedom creates a social order ?By enabling people to cooperate with one another without coercion or central direction . . .? (p. 2-3). This is an anarchist?s dream, not a serious idea about the way the world works.
The third problem is obvious in this last formulation: for Friedman, all economic actors are individuals. The existence of corporations, he says, ?does not alter matters. We speak loosely of the ?corporation?s income? or of ?business? having an income. That is figurative language. The corporation is an intermediary between its owners?the stockholders?and the resources other than the stockholders? capital, the services of which it purchases [sic]. Only people have incomes . . .? (20). Corporate institutions don?t exist in his world.
The fourth problem arises from this evaporation of the corporation: Friedman sees no serious threats in differences in economic power. He repeats the fantasy at the nineteenth century roots of the so-called ?American Dream,? the idea that individual workers freely sell their labor. In the sentimental historical vignette of immigrants coming to America for economic opportunity in his ?Introduction,? Friedman observes that our most rapid growth came after slavery was abolished. At that time ?The millions of immigrants from all over the world were free to work for themselves, as independent farmers or businessmen, or to work for others, at terms mutually agreed.? (emphasis added). The idea that workers and employers engaged in a symmetrical negotiation?an example of the assumption that all economic actors are individuals?about terms of work reflects a stunning ignorance of history.
The fifth problem is Friedman?s unwillingness to talk about private economic power. He does not discuss the economic role of corporations except to inveigh against the folly of taxing corporations. His basic assumption is that the cooperation induced by the free market ?reduces the area over which political power is exercised.? (p.3). He continues to assert that, ?by dispersing power, the free market provides an offset to whatever concentration of political power may arise. The combination of economic and political power in the same hands is a sure recipe for tyranny.? (p. 3). Throughout the book Friedman?s persistent assumption is that the only institutions that acquire any economic
power are the government or labor unions. He is oblivious to the possibility that growth of political power (?government?) developed as an offset to the concentration of economic power in corporations. When speaking of the progressive movement of the late 19th and early 20th centuries he says nothing of the conditions that arose because the economic power of corporations had become immense political power as well.
His inability to see corporations as economic entities is clear as he dismisses the New Deal in strictly personal terms. His analysis of the change that occurred is that ?The view that government?s role is to serve as an umpire to prevent individuals from coercing one another was replaced by the view that government?s role is to serve as a parent charged with the duty of coercing some to aid others.? (p. 5) (emphasis added). He has no conception that the economy, the government, and individuals are all part of a single system.
Free to Choose is a very dangerous book. It appeared at a time when the government of the United States had lost legitimacy among many Americans through its pursuit of racial and gender policies that undermined the status of white males, the loss of international stature, the horrible mistake of Vietnam, and the mess that led to the resignation of Richard Nixon.
Many Americans wanted an alternative to government, and Free to Choose promised an orderly anarchy created by a free market. It was a captivating fantasy in which many believed. Enough still believe that we are at risk of riding this anarchic unicorn from democracy into an oligarchic plutocracy?a system more like the Russia of today than like the United States of 1975.
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